Lesson Learning in a Government Shutdown

We seem to be once again on the precipice of a government shutdown. Many Tea Party Republicans hear their core supporters at home say “shut it down” and seem determined to fight the wars their party lost in the mid-1990’s.

As someone who believes in government, I think that shutdowns can be a valuable teaching tool for the broader public about what government does and how it should be valued. Many perceive that government is that body that funds things they don’t benefit from, with the lion’s share of spending on welfare and foreign aid. The public suffers from a major case of fiscal illusion – falsely perceiving that the government benefits they do value are not government programs.One lead reporter for a major metropolitan television news station asked why the Weather Service was not producing its ordinary reports during the government shutdown of 1995-1996. He was shocked to learn that the Weather Service was a government agency.

The shutdown is a teaching moment that lays bare the foundations of what government does. Much like draining a pond, it enables us to see what lies beneath the surface of all of the illusions and misleading rhetoric framing government programs by self interested advocates of all sides of the political equation. We go to great length to disguise government in this country, so it isn’t any wonder that our citizens are confused about the nature and the source of the benefits that government delivers. For instance:

• Programs like social security are funded by payroll taxes that workers pay during their careers, giving rise to the perception that the social security program is merely an insurance scheme with government as the payment agent.

• Medicare is a combination of earmarked payroll taxes, fees from seniors and general revenues. It is no wonder that 40 percent of those polled were unaware that Medicare is a government program.

• The federal government collects user fees that often fund the entire costs of programs – the SEC and now the Patent Office are two examples. Is it any wonder that those who pay feel that they are getting services for payment rendered much as they would from Home Depot? In total, for FY 2010, the federal government collected $600 billion in offsetting collections and receipts, or over 14 percent of gross outlays.

• The federal government finances over $600 billion a year in grants to state and local governments, over 17 percent of federal outlays. Many of these grants lose their identity and become comingled with related state or local programs, often getting passed down through as many as six layers of governments and nonprofit organizations before they reach their final service delivery point.

• The federal government disguises more than $1trillion in subsidies through the tax code. The oxymoronic term, “tax expenditures” is understood by precious few, helping to aid the disguise.

Our federal system is sufficiently complex that only a skilled observer can help reveal the true nature of the federal landscape. For instance, even during a shutdown, many subsidies continue. Tax expenditures don’t stop. Federal agencies funded by non-appropriated funds such as user fees will dutifully come to work even while the rest of government shuts down. And shutdowns in federal grants may not have an impact on services thanks to the pipelines of federal money that have not yet been spent and the ability of some state and locals to compensate, at least for several months.

This is why we pay leaders; to educate and teach the public about the stakes that flow from decisions and from non-decisions.

Paul L. Posner is the Director of the Public Administration Program at George Mason University.